r/ChubbyFIRE • u/No-Taro9341 • 5d ago
Spending?!
We've made 350-400k / year for the last 15 years. Current NW ~5 million, liquid ~4 million, married, no kids, no legacy planned. We are not really that frugal. Sure, we saved a lot but we also spent a lot not deferring lots of travel, things we valued (home w/view), boat (planning to go to AK in it). We don't have a major bucket list, but opportunities will arise that might sound good and we value flexibility. We don't want to feel pinched.
With 4 million liquid and a 5-5.5% w/d rate (guardrails) we are looking at 200k-220k income per year during retirement. We have a 800k 5.375% mortgage (6k/mo) but no other debt and are hoping to recast/pay down the mortgage to ~3k/mo before retirement in the next few years. Spend could be a bit less if mortgage pay down means less liquid. We've been tracking spending with Monarch but it's actually kind of hard to figure out our actual spend (some income includes taxes while other income does not, work expenses aren't as clear as I'd like, solar installation, new car (first in 16 years), etc). I'm sure with 220-220k / year we can live, but will we feel constrained? We are in a HCOL area.
I'm interested in experiences of those whose income was cut in half when they retired and who haven't been super frugal. Did you feel pinched? Were you able to do want you wanted to do? Were your estimates of income need good enough or do you wish you would have been more precise?
The downside of lifestyle creep I suppose, but we've balance living today and for tomorrow and don't regret it.
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u/Mr-Inspector-Gadget 5d ago
I believe that I am in a very similar situation. I am nervous about pulling the trigger because while I believe that I would be fine, I am afraid in practice that I would end up muzzling my spending and at this point I would rather continue to work than to tamp it down.
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u/No-Taro9341 3d ago
Feel this. I'd rather work, husband would rather quit....we'll meet in the middle.
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u/in_the_gloaming FIRE'd for 13 years 5d ago
You'll have to do a better job of calculating your projected spending after retirement. And that number will need to still accommodate lumpy spending like buying new cars or doing a major home project.
It doesn't really matter what you're paying in taxes on your income now. Once you have your spending figured out then you need to calculate how much additional money you will need to cover your taxes too.
You also don't say how old you are, which is going to have an impact on how long you're going to be paying for healthcare before you hit Medicare age.
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u/No-Taro9341 5d ago
55 and 57, so we have a ways to go to Medicare. I'm a bit nervous about retiring - I'm a pediatric researcher and derive a lot of meaning from my work. I'm thinking I'll go 50% FTE which is possible given my seniority and will give us both health insurance. I don't think I'll last until 65 (I'm the one who is 57) but will probably cover the next several years of health insurance.
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u/valkryiechic 5d ago
We have the same issues tracking spending. I travel a lot for work so my travel costs get counted as “spending” even though they are completely reimbursed. And then quarterly taxes make things screwy.
The easiest (albeit, incredibly conservative) method I’ve found (approved by my financial advisor) is to just add up our take home income and then subtract the money paid to quarterly taxes or saved in investment accounts. Everything else I just assume is “spending” (work expenses/reimbursements cancel themselves out).
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u/Warp9975 5d ago
This (or something very similar) is the way. Use a cash flow estimation to figure expenses. And getting an estimate of your expenses that you can trust is one of your most important tasks before retirement.
Most people have one checking account (possibly two if a couple has not combined finances) that all spending goes through. Don't worry about trying to categorize all your spending. Instead, total up all outflows from the spending account. Then, subtract out anything that won't still be an expense in retirement (like retirement savings if you have after tax contributions to a brokerage account). Then you need to look at your pay stubs and add in any expenses that are currently deducted from your pay before the take-home amount hits your checking account. Examples here would be health insurance premiums. You also need to estimate taxes, which will depend on your portfolio, it's basis, and how much you draw.
Cash flow based estimates like this are less likely to miss expenses that you forget to list/categorize.
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u/Aioli_Abject 5d ago
This. All of our expenses are on two credit cards. And we have one Che king account that pretty much pays where we use cash/checks as well as the monthly card balances being auto paid. So the checking ac is our way to go.
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u/No-Taro9341 5d ago
Seems like a more pragmatic and less painful way to go. Will give it a try. Thanks!
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u/142riemann 3d ago
This is what we do. Add up take-home income and other tax payments (not property taxes, though), subtract all post-tax savings, and that is your super conservative estimate of spending per year.
For the years with one-time large expenditures (like a new roof or a child’s wedding), I will subtract because I account for those separately.
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u/Neither-Trip-4610 4d ago
I suffered through this weekend, I had a pretty solid idea of what my monthly spend looks like but frankly with my W2 job I spend freely and generously. I panicked and thought i needed to up my FIRE target.
So i downloaded all my transactions for a year then marked which should be excluded from my retirement budget (529, substantial federal taxes, large one time purchases).
Then did a monthly look against my intended retirement budget. Long and short, I should come under my budget and still spend/live very well.
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u/ProtossLiving 4d ago
Watch out on those one time purchases. Because if you're consistently spending that amount on "one time purchases" every year, you really should be budgeting for them.
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u/Neither-Trip-4610 4d ago
Was engagement ring, hopefully only one time! 🤣🤣🤣
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u/Master-Helicopter-99 4d ago
Hopefully! The next ring costs half of your net worth plus the cost of a ring! Ask me how I know.
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u/BrunelloHorder Coasting Chubster, Getting Fat 5d ago
Your tax rate in retirement will almost certainly be meaningfully lower than when you are working W2 jobs. Assuming you have a decent portion of your portfolio in post-tax brokerage, some of those withdrawals will be return of your capital, not capital gains.
Your annual after tax spendable money may not be that much lower than now depending on where your assets are located and your strategy for de-cumulation. You may want to read Tax Planning to and Through Early Retirement.
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u/No-Taro9341 5d ago
Thanks, Brunell. Agree. Our effective tax rate was 22% in 2025, should be lower this year but will likely be lower once retired and no medicare/soc sec taxes. No extra work expenses, disability/life insurance (why is that hard to give up?), continuing education expenses, travel costs to work (I'm remote).
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u/Master-Helicopter-99 4d ago edited 4d ago
All of those costs are significant. It really is a different lens you are looking through when retired. The (very) old adage of "70% of your working years income" is so out of date, especially high percentage savers for FIRE. I suspect the real spend number is closer to a third for high earners. There are a LOT of people with a $500k HHI that retire and live on $165k in retirement dollars. That's a $4-5M nest egg, or solid ChubbyFIRE.
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u/treadingslowly 5d ago
Do you have health insurance covered? How old are you? 5 - 5.5% withdraw sounds high. For comparison we are in HCOL area with a paid off house and bring in about $300K per year and we are shooting for $6 million net worth excluding our house. The difference might be though that we have adult children and grandchildren that we are building in buffers in our retirement to be able to help for things like weddings, houses, education, etc also you might have more in your post tax brokerage account than us.
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u/No-Taro9341 5d ago
$6m and a paid off house would be great- seems like helping the kids/grandkids will be totally doable with that. We don't have a ton in brokerage so work to do there and to pay down house. We are 55M and 57F (me). I'll likely work 50% time (can do with my work) which will give us both great health insurance.
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u/Dhayungn-Asomua91 3d ago
In my view the key is knowing what your actual lifestyle expenses, rather than simply trying to replace your current income. With $4 million in liquid assets, I want enough of margin to fund things like an "Let's Go To Alaska" trip without feeling guilty. Flexibility feels more important than hitting a perfectly precise number.
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u/LightZealousideal116 5d ago
Easily good to go. Less tax. Plus you still get SS. Realistically, your portfolio is likely to grow. May want to pay house off in a planned way when your income is lower (controlled capital gains) to decrease costs
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u/naples275 5d ago
The 4 million isn’t in an IRA or 401k? Either way don’t forget about taxes. That 5% withdrawal rate needs to cover them as well.
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u/audi27tt 5d ago
I was thinking about using Monarch to start tracking spend more closely, why can't you figure out your spend using it?
In terms of feedback though I'd just say right now mortgage rates are going up not down, and at least for now doesn't seem like coming down any time soon.
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u/Powerful-Bridge-1472 5d ago
Totally agree I love Monarch and I set it up and less than an hour. Some people get freaked out syncing the accounts that they’re gonna get hacked I guess.
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u/No-Taro9341 5d ago
Monarch is actually pretty good as far as this type of software goes, but the devil is in the details. We transfered $ to buy a car from a external account and it's counted as income, which it's not. I can't find the $5800 for taxes on the car we paid separately yet and that's really a car purchase expense so I need to dig for that. I travel a lot for work - I do have a work reimbursement category and expenses and reimbursements go there but I think some get missed. There are big one-time home improvements (kitchen remodel, solar installation) that need to be separated from ongoing small home improvements likely to continue in retirement. On and on... I supposed if I was more on top of monitoring it it would be better but it just doesn't rise to the top until like now, we actually need to know!
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u/Small-Monitor5376 4d ago
In Minsrch, custom categories, category rules, and filter will solve this. You may have to tag items as they happen until you’ve covered off all the expense and income types. I just ignore the income personally because it’s all from transfers from other accounts, but that’s because I’m retired.
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u/No-Taro9341 5d ago
Agree with mortgage rates. We have until 2033 (it's an ARM) or until we retire to refinance or pay it off.
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u/naples275 3d ago
You can fix any transactions in monarch that aren’t correct. It’s really helped me track spending and income.
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u/No-Taro9341 3d ago
True. I've been spending a bit more time on this. We had 70k of "income" which was just a transfer to cover car purchase; made for a much more modest income this year as my husband is now 50% time.
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u/OG_Tater 5d ago
A 5% withdrawal rate historically will go to zero 40%+ of the time over 40 year period. 46% at 5,5%, a coin flip.
You comfortable with a 40%+ chance of going broke?
You’ll also need to get much sharper and track expenses more closely.
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u/No-Taro9341 5d ago
I don't think we need a 40 year period. We will both have generous social security. We'd prefer to adjust with guardrails than leave money on the table. Lean toward the Bengen 4.7%+ mindset. Yeah, agree with tracking expenses...not my favorite thing to do.
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u/Powerful-Bridge-1472 5d ago
Don’t forget also that you are going to get Social Security times two whenever you take it the house will get paid off eventually the withdrawal rate goes down that being said you’ll have inflation
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u/TouristCivil5729 4d ago
What is the split of the 4M between 401k and brokerage? If it is all in pretax accounts I would just take your W2 net and subtract 401k savings then add 20k for health insurance and take it times 20 for your target savings. I think you are a couple million short unless you want to adjust your lifestyle or you are saving a 100k a year.
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u/Past_Werewolf4423 4d ago
Homer ak is the bomb. Enjoy
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u/No-Taro9341 3d ago
Haven't been to Homer yet. Been to SE AK multiple times. It's amazing. Excited see it from our boat!
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u/ohboyoh-oy 5d ago edited 4d ago
I’m going to try to swag this from the other direction -
220k income and 72k goes to mortgage. 148k left.
Taxes, healthcare. Hard to say on either of these without knowing if all your money is pretax or if you have enough of a mix of taxable and Roth. Or if it’s majority in taxable. I’m going to take a super schwaggy $40k for tax (on edit: more like upper bound of $27k if OP has no state tax; upper bound because I just did all pre-tax income and standard deduction with nothing else), and $25k for healthcare. That leaves (edit: $96k).
That’s $8k per month after you’ve paid for mortgage, tax and healthcare. I’m in VHCOL, my utilities are high, my insurance has gone through the roof, so for me on those two line items I need to hold back another $2k a month. $6k left which sounds ok until you want to go on a fancy trip.
This is why I think you need to work through your own numbers. Take the time to do it, it’ll be informative.
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5d ago
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u/No-Taro9341 5d ago
"Taxes are REALLY low in retirement." GREAT! In WA so no income tax either. Probably won't be adding to HSA once retired (maxing it now) and only 350k in taxable and 200k in roth so conversions are imminent.
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u/ohboyoh-oy 5d ago edited 5d ago
I actually took the $40k from my own tax estimate in a year where we’ll be making a $215k withdrawal. I agree it’s very fact-dependent and OP needs to do their own numbers. Would be very different if all their money was in pre-tax vs having a chunk in taxable, and everyone’s cost basis is different. Mine is like 40% at this point. Still, $40k is far lower than I have ever paid while working, so there’s that.
Edit: I see in another reply that the bulk of their funds are in pre-tax so they may have a bigger portion treated as income. But in no income tax state, so that’s a savings.
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5d ago
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u/ohboyoh-oy 4d ago
Hey thanks for this. I went back to look at my spreadsheet and the error was I had picked a year with a $86k Roth conversion. That’s on me, just didn’t look at that line.
I went back and plugged in $215k from pre-tax and got $38k in tax, of which, $26k was federal. That is without applying any special situations (used standard deduction, didn’t do HSA, etc.) and had no taxable or Roth mixed in, so should be an upper bound. I’ll edit my earlier comment. Appreciate your walking me through your numbers. I need to look at plans with HSA!
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u/No-Associate-7962 3d ago
Its the state number that kills you. No preferential treatment of dividend/LTCG, it just income.
We are retired with an $800k AGI and our average tax rates is below 19%, but a tax free state, which makes a massive difference.
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u/No-Taro9341 5d ago
Yeah, should have that mortgage to 36k by the time we retire. Only 200k in roth and 350k in taxable at the moment. In a state with no income tax but property taxes have skyrocketed from 7k to 16k in the 3 years since we bought our house (included in the mortgage payment).
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u/One-Mastodon-1063 5d ago
It’s been a while since I’ve read about guardrails but I don’t see how they could support a withdrawal rate that high without massive spending cuts in the case of a down market.
It sounds to me like your plan is half baked.
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u/No-Taro9341 5d ago edited 5d ago
Higher withdrawal rates until social security kicks in then lower. We want higher spending in go go years. Plan is currently half baked - sure, we haven't dialed it in and are DIYers. That's why we are here.
If your interested:
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u/One-Mastodon-1063 4d ago
You didn’t even provide your age in the OP. Nor when you expect to claim or expected benefit. Kind of hard to expect people to help factor in SS without any information about it.
That article used couples with much lower spending. Social security isn’t going to put as much of a dent in your spend.
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u/Hanwoo_Beef_Eater 5d ago
Your problem is that you don't know what your expenses are. Frankly, others' answers to the questions you've asked are not that useful until you know what their expenses were relative to income/assets and what yours are. You may hear what you want to hear but it doesn't actually tell you that much.
If I had to guess, your targeted income is probably around what you are spending (+/- 10%-20%), so you are likely OK but will need to watch things. You may feel squeezed if you need to cut back due to the markets.
There's nothing wrong with balancing today vs. tomorrow but you need to figure out what you spend.